An increase in the optional standard mileage rate has been announced for the final 6 months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.
For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13, issued today.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from Jan. 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03. While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.
Mileage Rate Changes
||Rates 1/1 through 6/30/22
||Rates 7/1 through 12/31/22
This program will distribute $500 million to lower-wage frontline workers who put themselves at risk with admirable commitment to their communities. The one-time Essential Employee Premium Pay Program $500 payments will be delivered to 500,000 people in March in Massachusetts, with the first receivers being essential workers.
On December 13, 2021, Gov. Charlie Baker signed into law the COVID-19 Essential Employee Premium Pay Program. The Legislature allocated $460 million for premium payments to Massachusetts workers, which will distribute a $500 payment to 500,000 low-income workers across Massachusetts, according to the state’s website.
In order to be eligible, recipients must have:
- Filed a 2020 tax return
- Been a Massachusetts resident in 2020, or a part-year resident that lived in Massachusetts between March 10, 2020, and December 31, 2020
- Earned income of at least $12,750 in 2020 employment compensation
- Had a total household income at or below 300% of the federal poverty level in 2020
All eligible individuals will automatically receive a check in the mail, according to the state’s website.
However, individuals who received unemployment compensation in 2020 will not be eligible for the first round of payments, nor will Commonwealth executive branch employees who received or will receive a one-time payment from the state as their employer.
The $12,750 income requirement equates to working 20 hours a week for 50 weeks at minimum wage as of 2020 ($12.75). For example, the maximum total income for a single filer with no dependents will be $38,280; a resident who files with a spouse and two dependents, or with no spouse and three dependents, could be eligible with a household income up to $78,600. Married filers can each be eligible, provided each independently qualifies, the website notes.
A future round of payments will be based on 2021 tax returns, and additional rounds are also on the table.
FAQ’s Regarding the Payments
HOW THE PAYMENTS WORK
Q. Do I need to take any action to receive this payment?
No. If you are eligible to receive a payment from this program, you will automatically receive the payment in the form of a check that will be mailed to you.
Q. How many rounds of the premium pay program will there be?
The first round of payments will be made based off 2020 returns. Following tax filing season, the next round of payments will be made using information from 2021 returns. After that, the program will be evaluated for any additional rounds.
Q. Are payments being sent to workers in certain industries?
No, your eligibility is not determined by the industry in which you work. You are eligible for a payment if your income from employment in 2020 was at least $12,750 and your total income puts you below 300% of the federal poverty level, based on filed 2020 Massachusetts tax returns.
Q. How do I find out what my gross income was in 2020?
Gross income is defined as federal adjusted gross income for tax year 2020. To find your federal adjusted gross income, look at your 2020 Massachusetts Form 1, or at line 11 of your 2020 U.S. Form 1040.
Q. What is income from employment?
Income from employment means compensation paid in connection with work you did in 2020, as opposed to retirement income, investment income, or other income not associated with a job. More specifically, income from employment would have been reported on Line 3, Line 6a, Line 6b, or Line 7 (non-passive income only) of your Form 1 for 2020.
Q. I filed for unemployment in 2021 and 2019, am I eligible for a payment?
If you claimed unemployment compensation in 2020, you are not eligible for a check in round 1 of the premium pay program. However, unemployment compensation in 2019 or 2021 does not affect eligibility for a round 1 check, so long as you are otherwise eligible based on residency and income.
Q. What does three times the federal poverty level mean?
The U.S. Department of Health and Human Services creates a table each year as a guideline for gauging the “poverty line”; income below this level implies a household is living in poverty. The poverty level increases for households with more people living in them. This table is used by states and the federal government to set eligibility for various programs, including this program, often by using a multiple of the Federal Poverty Level in order to set a uniform cutoff for lower or middle income households.
Here’s the chart for 300% of, or three times, FPL for 2020:
|Persons in family/household
||300% of FPL
|Persons in family/household
||300% of FPL
For family size greater than 8, add $13,440 for each additional member to calculate 300% of FPL.
Q. My spouse works part-time, and we file jointly. Are we both eligible to receive a payment?
Each spouse must be independently eligible in order for that spouse to receive a payment. In other words, each spouse must 1) be a resident on or after March 10, 2020; 2) have 2020 earnings from employment of at least $12,750; and 2) have no unemployment compensation in 2020. Additionally, you and your spouse’s total income (federal adjusted gross income) cannot be greater than 300% of the federal poverty level ($51,720 for a family of two, or more if you claim other dependents on your taxes).
Therefore, it is possible that neither spouse, or only one spouse, or both spouses would be eligible for a payment.
Q. I made below the minimum threshold in 2020 but was within the range this past year. Will I be eligible in a future round?
Further information on future rounds will be available this summer. Please note that income thresholds may be adjusted for 2021, as both the minimum wage and the Federal Poverty Level figures changed from 2020 to 2021.
Q. What should I do if I have questions about my eligibility?
A call center is available to answer questions about eligibility at (866) 750-9803 Monday through Friday, 9am – 4pm.
A premium pay call center is available at (866) 750-9803 to answer questions Monday through Friday, 9am – 4pm.
It’s April already. Are your taxes done? If your answer to the question is no, you are not alone. The Internal Revenue Service says as many as 25 percent of taxpayers file their returns the final two weeks before the filing deadline. And with the recent COVID-19 Coronavirus Pandemic that we have been experiencing as well as the multiple stimulus programs offered, that percentage is probably quite higher.
If you have not completed your taxes yet, here are some stress-relieving ideas:
Don’t Procrastinate Anymore – Resist the temptation to put off your taxes until the very last minute. Your return takes time to prepare and your preparer may need to request certain documents from you, which will take additional time.
Don’t Panic If You Can’t Pay – If you can’t immediately pay the taxes you owe, consider some alternatives. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late-payment penalty rate. You also have various options for charging your balance on a credit card. There is no IRS fee for credit card payments, however the processing companies charge a convenience fee. Electronic filers with a balance due can file early and authorize the government’s financial agent to take the money directly from their checking or savings account on the April due date, with no fee.
Request an Extension of Time to File,- But Pay on Time – If the clock runs out, you can get an automatic six-month extension, bringing the filing date to October 15, 2022. The extension itself does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late-payment penalty if you have not paid at least 90 percent of your total tax by that date (normally, but see exception above). Contact your tax professional for a variety of easy ways to apply for an extension.
To get an estimate of what you owe, you generally have to do a dry run of your tax return—which probably means you will have almost everything you need to file anyway. If they’re 90 percent done, it’s really in your best interest to just get it done and file by April 15th (and for this current tax season, you have until April 19th if you live in Massachusetts or Maine).
Contribute to (or Open) an IRA Account or HSA Account
You can make previous-year contributions to a Traditional or Roth IRA, or SEP-IRA through the filing deadline. If you still need to open an account, be warned that some companies’ processes are not instantaneous. If you are under 50, you can contribute up to $6,000 into your Traditional or Roth IRA accounts and add an additional $1,000 if you are over age 50. SEP-IRA contributions can not exceed $58,000 but the actual amount depends on your specific situation. Best to seek professional advice on this.
If you’re covered by a high-deductible health plan—defined as a minimum deductible of $1,400 for an individual or $2,800 for a family—you can also deduct contributions made to a Health Savings Account (HSA). You have until the tax filing deadline to make a deductible contribution. For 2021, you can contribute up to $3,600 to an HSA if you have self-only coverage or $7,200 for family coverage. People aged 55 or older can make an additional $1,000 “catch-up” contribution.
If you are needing assistance, please reach out to us here at Northeast Financial Strategies ASAP.
For the first time, the maximum educator expense deduction rises to $300 in 2022; limit $250 for those filing 2021 tax returns
WASHINGTON – The Internal Revenue Service today reminded teachers and other educators planning ahead for 2022 that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses when they file their federal income tax return next year.
This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax-years 2002 through 2021, the limit was $250 per year. This means for people currently filing their 2021 tax returns due in April, the deduction is limited to $250. The limit will rise in $50 increments in future years based on inflation adjustments.
For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they are married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.
Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public- and private-school educators qualify.
Educators can deduct the unreimbursed cost of:
- Books, supplies and other materials used in the classroom.
- Equipment, including computer equipment, software and services.
- COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention (CDC).
- Professional development courses related to the curriculum they teach or the students they teach. For these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.
Qualified expenses don’t include expenses for home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.
Reminder for 2021 tax returns being filed now: Deduction limit is $250
With the tax deadline just around the corner, the IRS reminds any educator still working on their 2021 return that they can claim any qualifying expenses on Schedule 1, Line 11. For 2021, the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.
Jeffrey Schweitzer Of Northeast Financial Strategies, Inc. Honored As Wrentham’s 2022 Local Business Person Of The Year
BOSTON, MA: February 16, 2022 — The largest online referral network for small businesses, Alignable.com is announcing the results of its national search for leaders who’ve gone above and beyond guiding peers and supporting entire communities as they strive to recover.
Today, Alignable’s network has chosen Jeffrey Schweitzer of Northeast Financial Strategies, Inc. as Wrentham’s 2022 Business Person Of The Year for the second year in a row!
The 2022 contest is the most popular competition Alignable has ever hosted, marking a 64% increase in participation over last year. In all, 2,400+ small business owners were elected by their peers to be their Local Business People Of The Year across the U.S. and Canada.
During the contest, which ran from Jan. 10 to Feb. 11, 2022, 160,000+ votes and 32,000+ testimonials were posted praising thousands of local leaders for helping their peers and communities through a turbulent year with many challenges: skyrocketing inflation, labor shortages, supply chain problems, and COVID variants.
Because of these issues, 70% of small businesses have yet to recover and recovery rates have declined 13% since December, according to Alignable’s latest poll of 6,305 small business owners. This recovery reversal highlights how important it is for the contest winners to continue their work helping even more businesses bounce back from pandemic-era hurdles.
Giving Is The Glue Holding Us Together
“In our tight-knit community, you almost always get back what you give,” said Schweitzer. “And the challenges we’ve all encountered have compelled many of us to offer counsel and other support to peers struggling to keep their businesses afloat. While I’m thrilled to receive this award, it’s really a testament to our entire community. And it reinforces my resolve to push toward a full recovery for everyone here in Wrentham by the end of 2022, if not earlier.”
Schweitzer received a special badge on his Alignable profile, recognizing this big win. In past years, the awareness generated through similar contests has spurred expanded connections, as well as new business for many winners. Schweitzer received the same award for the 2020-2021 contest.
Driving Recognition Is Key
“This has been a fun and rewarding contest to watch unfold,” said Alignable’s President & Co-Founder Venkat Krishnamurthy. “Local business owners are the heart and soul of their communities and they ought to get way more recognition for all they do. Friendly competition aside, this contest generated some incredible peer testimonials (to the tune of 32,000+), showing exactly why small business owners are stronger together.”
To arrange interviews with Jeffrey Schweitzer and/or an Alignable representative, please contact Chuck Casto at firstname.lastname@example.org. He also can offer JPEGs and other visuals, as well as local winner testimonials.
About Northeast Financial Strategies, Inc.
Northeast Financial Strategies Inc. is a financial services organization with highly trained professionals working together to provide products and services to individuals & business owners. The firm is dedicated to problem solving which is reflected in their diversified portfolio of resources. NFS offers Financial & Estate Planning, Investments, Insurance, Accounting, Payroll, Income Tax Preparation, & Notary Public Services for Individuals & Small Businesses.
Since opening their office in Wrentham in the Fall of 2010, Northeast Financial Strategies has consistently been voted by readers #1 in the Wicked Local Awards in the categories of Accountant, Financial Planner and Insurance Agency. NFS have also brought home Regional Favorite Awards in the Accountant & Financial Planner categories consistently since 2016. Jeffrey Schweitzer was also awarded the 2020-2021 Local Business Person of the Year Award by Alignable and identified as a Top 31 Insurance Agency in the Providence area by Expertise.com.
Alignable.com is the largest online referral network for small businesses in the U.S. and Canada. With 7 million+ members across 35,000+ local communities, Alignable is the network where small business owners drive leads and prospects, generate referrals, land new business, build trusted relationships, and share great advice.
WASHINGTON − The Internal Revenue Service announced that the nation’s tax season will start on Monday, Jan. 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.
The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.
“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare,” said IRS Commissioner Chuck Rettig. “The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays.”
The IRS encourages everyone to have all the information they need in hand to make sure they file a complete and accurate return. Having an accurate tax return can avoid processing delays, refund delays and later IRS notices. This is especially important for people who received advance Child Tax Credit payments or Economic Impact Payments (American Rescue Plan stimulus payments) in 2021; they will need the amounts of these payments when preparing their tax return. The IRS is mailing special letters to recipients, and they can also check amounts received on IRS.gov.
Like last year, there will be individuals filing tax returns who, even though they are not required to file, need to file a 2021 return to claim a Recovery Rebate Credit to receive the tax credit from the 2021 stimulus payments or reconcile advance payments of the Child Tax Credit. People who don’t normally file also could receive other credits.
April 18 tax filing deadline for most
The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states. Taxpayers requesting an extension will have until Monday, Oct. 17, 2022, to file.
Awaiting processing of previous tax returns? People can still file 2021 returns
Rettig noted that IRS employees continue to work hard on critical areas affected by the pandemic, including processing of tax returns from last year and record levels of phone calls coming in.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” Rettig said. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 – and beyond.”
The IRS continues to reduce the inventory of prior-year individual tax returns that have not been fully processed. As of Dec. 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.
Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.
Key information to help taxpayers
The IRS encourages people to use online resources before calling. Last filing season, as a result of COVID-era tax changes and broader pandemic challenges, the IRS phone systems received more than 145 million calls from January 1 – May 17, more than four times more calls than in an average year. In addition to IRS.gov, the IRS has a variety of other free options available to help taxpayers, ranging from free assistance at Volunteer Income Tax Assistance and Tax Counseling for the Elderly locations across the country to the availability of the IRS Free File program.
“Our phone volumes continue to remain at record-setting levels,” Rettig said. “We urge people to check IRS.gov and establish an online account to help them access information more quickly. We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need.”
Last year’s average tax refund was more than $2,800. More than 160 million individual tax returns for the 2021 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.
Overall, the IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically if they choose direct deposit and there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.
By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February, though eligible people may file their returns beginning on January 24. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.
Some returns, filed electronically or on paper, may need manual review, which delays the processing, if our systems detect a possible error or missing information, or there is suspected identity theft or fraud. Some of these situations require us to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer.
File electronically and choose direct deposit
To speed refunds, the IRS urges taxpayers to file electronically with direct deposit information as soon as they have everything they need to file an accurate return. If the return includes errors or is incomplete, it may require further review that may slow the tax refund. Having all information available when preparing the 2021 tax return can reduce errors and avoid delays in processing.
Most individual taxpayers file IRS Form 1040 or Form 1040-SR once they receive Forms W-2 and other earnings information from their employers, issuers like state agencies and payers. The IRS has incorporated recent changes to the tax laws into the forms and instructions and shared the updates with its partners who develop the software used by individuals and tax professionals to prepare and file their returns. Forms 1040 and 1040-SR and the associated instructions are available now on IRS.gov. For the latest IRS forms and instructions, visit the IRS website at IRS.gov/forms.
Watch for IRS letters about advance Child Tax Credit payments and third Economic Impact Payments
The IRS started sending Letter 6419, 2021 advance Child Tax Credit, in late December 2021 and continues to do so into January. The letter contains important information that can help ensure the return is accurate. People who received the advance CTC payments can also check the amount of the payments they received by using the CTC Update Portal available on IRS.gov.
Eligible taxpayers who received advanced Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advanced Child Tax Credit payments can claim the full credit by filing a tax return.
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to individuals who received a third payment in 2021 in late January. While most eligible people already received their stimulus payments, this letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit for missing stimulus payments. If so, they must file a 2021 tax return to claim their remaining stimulus amount. People can also use IRS online account to view their Economic Impact Payment amounts.
Both letters include important information that can help people file an accurate 2021 tax return. If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund. Using this information when preparing a tax return electronically can reduce errors and avoid delays in processing.
The fastest way for eligible individuals to get their 2021 tax refund that will include their allowable Child Tax Credit and Recovery Rebate Credit is by filing electronically and choosing direct deposit.
Tips to make filing easier
To avoid processing delays and speed refunds, the IRS urges people to follow these steps:
- Organize and gather 2021 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers, and this year’s Identity Protection Personal Identification Numbers valid for calendar year 2022.
- Check IRS.gov for the latest tax information, including the latest on reconciling advance payments of the Child Tax Credit or claiming a Recovery Rebate Credit for missing stimulus payments. There is no need to call.
- Set up or log in securely at IRS.gov/account to access personal tax account information including balance, payments, and tax records including adjusted gross income.
- Make final estimated tax payments for 2021 by Tuesday, Jan.18, 2022, to help avoid a tax-time bill and possible penalties.
- Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers. Learn how to open an account at an FDIC-Insured bank or through the National Credit Union Locator Tool.
- File a complete and accurate return electronically when ready and choose direct deposit for the quickest refund.
Key filing season dates
There are several important dates taxpayers should keep in mind for this year’s filing season:
January 18: Due date for tax year 2021 fourth quarter estimated tax payment.
January 24: IRS begins 2022 tax season. Individual 2021 tax returns begin being accepted and processing begins
January 28: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
April 18: Due date to file 2021 tax return or request extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.
April 19: Due date to file 2021 tax return or request extension and pay tax owed for those who live in MA or ME due to Patriots’ Day holiday
October 17: Due date to file for those requesting an extension on their 2021 tax returns
It’s never too early to get ready for the tax-filing season ahead. For help with getting your taxes completed, please do not hesitate to reach out to our office or book an appointment right online here.